Apr 22 | 2019
Azerbaijan Sees Progress for Azeri Central East Project
The consortium behind development of Azerbaijan’s Azeri Central East project have announced plans to invest US$6 billion in construction of new infrastructure at the giant oil and gas field.
The final investment decision was approved by joint venture partners SOCAR, BP, Chevron, INPEX, Equinor, ExxonMobil, TPAO, ITOCHU and ONGC Videsh and is expected to bolster breakbulk activity across the region as construction ramps up over the coming years at the Azeri, Chirag and Gunashli, or ACG, fields.
“Today’s sanctioning marks yet another important milestone in the development of ACG for the benefit of the nation, which began 25 years ago with the signing of the contract of the century. For decades, SOCAR has been reinvesting Azerbaijan’s oil revenues in the development of a highly qualified workforce and modern industrial facilities in our country,” said Rovnaq Abdullayev, president of State Oil Co. of Azerbaijan Republic, or SOCAR.
BP Strengthens Azerbaijani Ties
The ambitious new development will be led by oil major BP, which retains a 30.37 percent stake and will see significant project cargo transport in the lead up to first production in 2023. Project plans include a new offshore platform and facilities designed to process up to 100,000 barrels of oil per day.
“Today’s announcement supports the long-term production plans we set for ACG when we extended the PSA. It demonstrates our commitment to work with SOCAR and Azerbaijan’s Government to continue to unlock ACG’s resources more efficiently and competitively,” said Gary Jones, BP’s regional president for Azerbaijan, Georgia and Turkey.
BP operates about 80 percent of the Azerbaijan’s production, and the country will be the fifth-largest contributor to production in BP’s global portfolio once ACE achieves first oil in 2023.
Optimistic Logistics Outlook
The landmark project marks the next stage of development for the giant ACG fields in the Azerbaijan sector of the Caspian Sea. The new investment is expected to drive more than 3 billion barrels of additional oil production from ACG and support Azerbaijan’s increasing role as an energy supplier for regional and global markets, according to SOCAR.
“Complex logistics mean many projects in the Caspian cost more and take longer than elsewhere. However, BP's sharp delivery of Shah Deniz Phase Two, which started on schedule and under budget last year, gives us reason for optimism,” said Robert Morris, senior analyst at Wood Mackenzie.
Fellow partners in the Azeri Central East project include SOCAR with 25 percent, Chevron with 9.57 percent, INPEX with 9.31 percent, Equinor with 7.27 percent, ExxonMobil with 6.79 percent, TPAO with 5.73 percent, ITOCHU with 3.65 percent and ONGC Videsh with 2.31 percent.
“Production at Azerbaijan's oil elephant may have peaked back in 2010, but with 3 billion barrels yet to be produced it is just halfway through its long life. The operator's core objective is managing that long decline to maximise recovery and remaining value. ACE is central to those plans, adding 100,000 barrels per day of production at peak in the mid-2020s,” Morris added.
The final investment decision was approved by joint venture partners SOCAR, BP, Chevron, INPEX, Equinor, ExxonMobil, TPAO, ITOCHU and ONGC Videsh and is expected to bolster breakbulk activity across the region as construction ramps up over the coming years at the Azeri, Chirag and Gunashli, or ACG, fields.
“Today’s sanctioning marks yet another important milestone in the development of ACG for the benefit of the nation, which began 25 years ago with the signing of the contract of the century. For decades, SOCAR has been reinvesting Azerbaijan’s oil revenues in the development of a highly qualified workforce and modern industrial facilities in our country,” said Rovnaq Abdullayev, president of State Oil Co. of Azerbaijan Republic, or SOCAR.
BP Strengthens Azerbaijani Ties
The ambitious new development will be led by oil major BP, which retains a 30.37 percent stake and will see significant project cargo transport in the lead up to first production in 2023. Project plans include a new offshore platform and facilities designed to process up to 100,000 barrels of oil per day.
“Today’s announcement supports the long-term production plans we set for ACG when we extended the PSA. It demonstrates our commitment to work with SOCAR and Azerbaijan’s Government to continue to unlock ACG’s resources more efficiently and competitively,” said Gary Jones, BP’s regional president for Azerbaijan, Georgia and Turkey.
BP operates about 80 percent of the Azerbaijan’s production, and the country will be the fifth-largest contributor to production in BP’s global portfolio once ACE achieves first oil in 2023.
Optimistic Logistics Outlook
The landmark project marks the next stage of development for the giant ACG fields in the Azerbaijan sector of the Caspian Sea. The new investment is expected to drive more than 3 billion barrels of additional oil production from ACG and support Azerbaijan’s increasing role as an energy supplier for regional and global markets, according to SOCAR.
“Complex logistics mean many projects in the Caspian cost more and take longer than elsewhere. However, BP's sharp delivery of Shah Deniz Phase Two, which started on schedule and under budget last year, gives us reason for optimism,” said Robert Morris, senior analyst at Wood Mackenzie.
Fellow partners in the Azeri Central East project include SOCAR with 25 percent, Chevron with 9.57 percent, INPEX with 9.31 percent, Equinor with 7.27 percent, ExxonMobil with 6.79 percent, TPAO with 5.73 percent, ITOCHU with 3.65 percent and ONGC Videsh with 2.31 percent.
“Production at Azerbaijan's oil elephant may have peaked back in 2010, but with 3 billion barrels yet to be produced it is just halfway through its long life. The operator's core objective is managing that long decline to maximise recovery and remaining value. ACE is central to those plans, adding 100,000 barrels per day of production at peak in the mid-2020s,” Morris added.
